Managing In A Global Environment PDF

MANAGING IN A GLOBAL ENVIRONMENT Chapter 4 WHAT’S YOUR GLOBAL PERSPECTIVE?  Parochialism  Is viewing the world exclusively through one’s own eyes and perspectives.  Is not recognizing that others have a different ways of living and working.  Is a significant problem for managers w...

MANAGING IN A GLOBAL ENVIRONMENT Chapter 4 WHAT’S YOUR GLOBAL PERSPECTIVE?  Parochialism  Is viewing the world exclusively through one’s own eyes and perspectives.  Is not recognizing that others have a different ways of living and working.  Is a significant problem for managers working in a global business world.  Is falling into the trap of ignoring others’ value and customs and strictly applying an attitude of “ours is better than theirs” to foreign cultures. WHAT’S YOUR GLOBAL PERSPECTIVE?  Ethnocentric Attitude  Belief that home country has the best work approaches and practices  Polycentric Attitude  Viewthat managers in host country know the best approaches and practices  Geocentric Attitude A world-oriented view that focuses on using the best approaches and people from around the globe 3 REGIONAL TRADING ALLIANCES  The European Union (EU) A unified economic and trade entity  Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Germany, Austria, Finland, and Sweden  Economic and monetary union (Euro)  North American Free Trade Agreement (NAFTA)  Eliminatedbarriers to free trade (tariffs, import licensing requirements, and customs user fees)  United States, Canada, and Mexico 4 REGIONAL TRADING ALLIANCES  U.S.- Central America Free Trade Agreement (CAFTA)  Free Trade Area of the Americas  Southern Cone Common Market (Mercosur)  Association of Southeast Asian Nations (ASEAN)  African Union  South Asian Association for Regional Cooperation (SAARC) ASEAN MEMBERS SAARC MEMBERS GLOBAL TRADE MECHANISMS  General Agreement on Tariffs and Trade - An agreement between countries that seeks to reduce or eliminate tariffs and other trade barriers.  World Bank – A financial institution that provides assistance to developing countries.  Organization for Economic Co Operation and Development (OECD) – An international economic organization that helps its 37 member countries achieve sustainable economic growth and employment.  World Economic Forum – Annual meeting that brings together several thousands of the world’s leaders to find solutions to economic, social and political problems.  International Monetary Fund (IMF) – An organization of 189 countries that provides temporary loans to its members, facilitates international trade and seeks to promote economic growth and reduce poverty.  World Trade Organization (WTO) – A global organization of 164 counties that deals with the rules of trade among nations. Evolved from GATT in 1995. Monitors and promotes world trade. DIFFERENT TYPES OF GLOBAL ORGANIZATIONS  Multinational Corporation (MNC) ◦ A firm that maintains operations in multiple countries but manages from the home country  Multi-domestic Corporation (TNC) ◦ Is an MNC that decentralizes management and other decisions to the local country.  Global Company Is an MNC that centralizes its management and other decisions in the home country. 11 DIFFERENT TYPES OF GLOBAL ORGANIZATIONS Transnational or Borderless Organization  Is an MNC that has eliminated structural divisions that impose artificial geographic barriers and is organized along business lines that reflect a geocentric attitude HOW ORGANIZATIONS GO GLOBAL  Global sourcing  Purchasingmaterials or labor from around the world where it is cheapest  Exporting  Makingproducts at home and selling them overseas  Importing  Selling products at home that are made overseas 14 HOW ORGANIZATIONS GO GLOBAL (CONT’D)  Licensing  Giving another organization the right to make or sell its products using its technology, or product specifications  Licensing (manufacturing organizations)  Franchising  Giving another organization the right to use make its name and operating methods  Franchising (service organizations) 15 HOW ORGANIZATIONS GO GLOBAL (CONT’D)  Strategic Alliance  Partnership between an organization and a foreign company in which both share resources and knowledge in developing new products or building new production facilities - Joint Venture A specific type of strategic alliance in which the partners agree to form a separate, independent organization for some business purpose  Foreign Subsidiary  Directly investing in a foreign country by setting up a separate and independent production facility or office 16 MANAGING IN A GLOBAL ENVIRONMENT  The Political/Legal Environment  Stability or instability of legal and political systems  Legal procedures are established and followed  Fair and honest elections held on a regular basis  Differences in the laws of various nations  Effects on business activities  Effects on delivery of products and services 17 MANAGING IN A GLOBAL ENVIRONMENT (CONT’D)  The Economic Environment  Economic Systems  Market economy  Aneconomy in which resources are primarily owned and controlled by the private sector  Planned economy  Aneconomy in which all economic decisions are planned by a central government  Monetary and Financial Factors  Currency exchange rates  Inflation rates  Diverse tax policies 18 MANAGING IN A GLOBAL ENVIRONMENT (CONT’D)  The Cultural Environment  National Culture  Values and attitudes shared by individuals from a specific country that shape their behaviour and their beliefs about what is important  May have more influence on an organization than the organization culture 19 GLOBAL MANAGEMENT IN TODAY’S WORLD  Challenges  Openness associated with globalization  Significant cultural differences (e.g., Americanization)  Adjusting leadership styles and management approaches  Risks  Loss of investment in unstable countries  Increased threat of terrorism  Economic interdependence of trading  Dealing with increased uncertainty, fear, and anxiety HOFSTEDE’S FIVE DIMENSIONS OF NATIONAL CULTURE GLOBAL LEADERSHIP AND ORGANIZATIONAL BEHAVIOR EFFECTIVENESS (GLOBE) PROGRAM: